Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 320 - 340)



Mr Fearn

  320. Why do you consider the restrictions on radio ownership by local or national newspapers should still be necessary?
  (Mr Hooper) We have suggested quite a significant liberalisation of cross-media ownership and we have set out a number of transparent rules to get away from what we currently have which is public interest tests for cross-media ownership. Having said that, one of the rules is that a local newspaper that has more than 50 per cent of circulation in a market area should only be able to own an analogue radio station if there are two others not so owned. That is the type of rule. In terms of national ownership we feel there is something very important in the media industry which is plurality of voice and there is a danger that could get lost if one had an over-consolidation across media.

  321. You think that would happen?
  (Mr Hooper) I think it would happen undoubtedly. The cross-media conglomerates that you see in America you would easily get here if you are not careful.

  322. The White Paper refers to various possible sources of money for an "access fund" for community radio. What scale of funding do you really think would be necessary to establish a flourishing new sector?
  (Mr Stoller) It depends whether or not you want the funding to provide for the continuing service or whether you merely want to provide for initial set-up costs. Our original view when we put forward the concept of Access Radio, which I am pleased to see has got the debate running, was that this funding should be for start-up only. There is a view you have heard from previous witnesses that the funding should be to provide continuing costs as well. You enter into this balance between if you have no continuing funding then do you allow a degree of commercial funding? If you exclude commercial funding entirely then you have obviously to fund your Access Radio services entirely from the public purse or things that are associated with it. There is an inter-relationship between the two arguments. Our initial view was that there should be a limited amount of commercial funding but not coming in through spot advertising or programme sponsorship and that the radio fund would provide start up non-recurring costs. This is being debated and will continue to be debated. If that argument fails then the balance of the amount of money you would need would also change. Our initial estimates were that we would be looking at something between £5 and £10 million for a radio fund for a start-up purpose. For providing continuing services it is many, many times a multiple of that.

  323. Start-up would be what? £5 to £10 million?
  (Mr Stoller) That was a guesstimate on our part, it is no more scientific than that. It seemed to us to provide for start up you were looking for that sort of money in radio funds.

  324. That is purely the Radio Authority putting that figure up?
  (Mr Stoller) Yes.

  325. There is no basis for that?
  (Mr Stoller) There is no basis for that.

Mr Maxton

  326. Can I come back to the future rather than possibly the present because there is always a danger because we now live in a very fast-changing world, and you were talking about a ten-year timescale for digital radio, and nowadays in new technology ten years is an extremely long time. Internet access to radio is already there but limited to slightly strange people (like me) who listen to it on their PCs. That is not going to be true in the future, is it?
  (Mr Hooper) It does take time and it is all a matter of degree and there are economic issues behind your question. Currently in the States I think the figure is four per cent of radio listening is to Internet radio and there is an equivalent figure here of one per cent. If we start from base it is a relatively small base. There is a very significant economic issue, which Stephen Buckley mentioned, in relation to the costs of providing radio over an Internet or telephony service as opposed to over a broadcast network and it is simply this: the Crystal Palace transmitter costs X pounds irrespective of the number of television or radio receivers. Ten sets listening to Crystal Palace or 10 million or 100 million, it does not matter. That is not true of a telephony network. You have got costs which are incremental per listener. One is the size of the server out of which it is broadcast eg the television station and, secondly, the bandwidth and the capacity in the telephony network. There are some economics which are very favourable to broadcasting methods and so therefore broadcasting will not die away that rapidly. Having said that, none of us certainly in the Radio Authority feel we can predict the future. It is very fast moving. Having said that, the Internet was founded in 1969 which is 32 years ago so it has taken a long time to get going.

  327. That is where it begun as an American Forces network or intelligence network. In terms of economic operation it is a lot shorter than that. I was very interested in what Mr Buckley said about the cost because the BBC at the present time broadcast almost all their output live on their web site. What is it costing them?
  (Mr Hooper) I do not think we are parti pris to that. Jenny Abramsky should answer that question when she comes if she comes.

  328. Can I turn to radio because you are parti pris to Virgin. What does it cost?
  (Mr Hooper) The interesting point, as Jenny Abramsky has pointed out, is that the number of simultaneous listeners to BBC radio is 25,000. That is de minimus in the broadcasting world.

  329. That is for each of their services?
  (Mr Hooper) Their total simultaneous capacity is 25,000 listeners because of these costs.

  330. But it is around the world—and let us take Virgin because that comes under your remit and they do it.
  (Mr Stoller) Yes, they do.

  331. They broadcast their radio station live on their Internet web site. Is that costing them that much? What is their audience?
  (Mr Stoller) I will try and find out some costs. Perhaps if it would be helpful I could write to the Committee and let you know. I do not know that. I do know that the commercial companies regard this multi-platform approach as something on which they move forward all of a piece and so audio-streaming within a web site is only part of the use of the web site because there is this very close relationship between radio and the Internet. The radio provides impact, the Internet provides back-up and bandwidth and data and the two go together very well. Radio companies tend to advance on a broad front. I will try and get some individual figures and I will write to the Committee promptly with what I am able to find out.

  332. What would be your position if Virgin were to produce a separate Internet programme? Do you have any control over it all?
  (Mr Hooper) Not only do we not have any control over it, we do not seek any control over it. We said clearly in our submission that we are not seeking to require a licence from Internet radio stations and the reason we give for that is that the fundamental reason for licensing broadcasts has to do with spectrum scarcity. That is the core of the rationale. There is no spectrum scarcity of any significance on the Internet and therefore it would not be appropriate for the Radio Authority to seek to regulate radio stations on the Internet.

  Mr Maxton: The next breakthrough in broadband is going to be into wireless operators which will, of course, make the mobile phone increasingly a way of accessing sound Internet on the Internet if not visual Internet. Once that happens, of course, basically every mobile phone, of which we now have 30 million in this country—

  Chairman: —4.5 million sold at Christmas alone.

Mr Maxton

  333. Becomes essentially a radio.
  (Mr Hooper) Again there are economics in a mobile network. There is a limited amount of spectrum from base station to mobile receiver—

  334. That is at the moment.
  (Mr Hooper) I think there will always be an issue of spectrum scarcity. I think the other interesting point is that the manufacturers are looking at putting digital radio chips into the mobile phone so that you can receive digital radio broadcasts through your handset. That is something we are extremely interested in because that is a very economic way of providing digital radio.

  335. But it still only allows you to listen to those radio stations being produced in that particular area.
  (Mr Hooper) Correct.

  336. Whereas the great beauty of Internet services—again being a real anorak I listen to jazz from the United States, Canada—is that I can pick up the jazz or whatever I want to listen to. I did raise the question with the digital radio people of the increasing ability of people to record their own music in forms and styles in which they want to record it and listen to it in the way they want to. Do you see this as a major threat in terms of radio in the future?
  (Mr Stoller) I see it as a potential competitor. I do not think I see it as a major threat. As was said to you before, I think radio has gone along with gramophone records, long play records, short play records, CDs, it is perpetually facing challenges from what you might describe as particular payment for music and indeed for recorded plays or whatever. I think it is a competitor. I have a hunch that radio will have the remarkable ability it has always shown in the past to renew itself but nobody can be certain. I think as a general rule looking into the future there are all of these competitive technologies, and one of them may turn out to see radio off, but nothing has done it yet, I hope it will not, but it would be daft to say it will never happen; of course it may.

  337. My view is that some of these and what will follow from that will be qualitatively different from CDs and from other previous recording prices and will allow you a flexibility which you never had from previous prices.
  (Mr Hooper) The extraordinary thing is that over the past ten years, with the growth of these new technologies, the listenership of commercial radio has increased by something like 40 per cent. This is a remarkable figure when you think this is sometimes described as an old media, 100 years old, it has gone, it is finished, it is passé. Commercial radio is the fastest growing advertising medium in the 1990s in the United Kingdom. I think that radio sits very synergistically with the new media. For example, when you are surfing the Internet you can listen to radio at the same time either from the Internet, as you do, or from terrestrial. That is not true of television. It is quite difficult to watch television and surf the Internet at the same time.

  338. You can!
  (Mr Hooper) I think the experience of audiences in America and here is that television audiences are showing signs of declining in Internet households whereas radio is not showing that.

  Mr Maxton: I have to say I can just about watch television and surf the net at the same time!


  339. Mr Wyatt opened his questions by talking about restrictions on broadcasting from schools. Schools are publicly owned, publicly financed buildings. They obviously perform an indispensable function in society. On the other hand, in terms of their existence they are extraordinarily under- used, a limited number of hours per day, a limited number of days per week, a limited number of weeks per year. There is a move which all of us, I guess, round this table support for school facilities to be used for community purposes, sports facilities, computer facilities. Why should schools not be available for use for community radio purposes? Mr Korbel was talking about two community radio projects in schools in my constituency. Why should not people living in those areas be able to use the technical facilities, the equipment that is available in the school and the premises (obviously under proper controls) for community radio services? It would be able to expand the voice of ordinary people in an exponential way.
  (Mr Stoller) I think it is a very attractive idea. The Authority's view at the moment is that, as we are currently set up, we would be exceeding our powers if we were to allow that, except under a very controlled basis. This is exactly the type of idea which underpins our proposals that government should legislate for a third tier of radio. This is precisely the sort of thing we would like to see happening. I am very sympathetic to the concept. I am nervous about taking the Authority's role beyond where it is clearly empowered into an area where it provides competition with those we have licensed under our duties under the Act, which might well then be challenged. There is a difficulty and if I might take it away from schools and on to football clubs, we give short-term licences to football clubs to broadcast for the day. We have to strike a very careful balance between what they will do, being partly commercial at least (and some more than partly commercial) within an area where there is a commercial station licensed to provide a service and licensed against very detailed criteria which, if I may say, you have given us and Parliament has laid down for the Authority to observe. The licences that we give on a short-term basis are at our discretion and have none of those criteria attached to them. We think it is important as we are currently empowered to strike a balance between what we do on our own initiative and what we do according to what Parliament has required of us.

  340. Do you think that the Broadcasting Bill anticipated perhaps next year might be useful to provide the kind of powers you say you are not sure you have?

  (Mr Hooper) This is clearly absolutely what we are looking for. We have made a strong recommendation for an access radio category of licence that sits alongside the BBC and alongside commercial radio, is distinctive from it, not-for-profit, non-profit distributing and so on. We feel if government legislates for that new category then many of the things you are talking about, Chairman, will come to pass.

  Chairman: Thank you very much. We are most grateful to you.

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